Travel checkout is a regulated surface. But regulations are not static, and they aren’t necessarily consistent across regulating bodies.
On July 2, the United States Federal Trade Commission (FTC) announced that Hopper agreed to pay $35 million to settle a complaint alleging the company hid fees and charged them without the user's consent. That same day, the U.S. Department of Transportation (DOT) issued a rule allowing airlines to disclose fewer ancillary fees up front than a 2024 standard required.
“What's very interesting is two different federal agencies have very different views on fee disclosures and consumer protection,” said Henry Harteveldt, president of Atmosphere Research Group.
It also speaks to the nature of the U.S. government, which is not a singular organization and “creates its own weather system,” as Harteveldt put it.
Hopper to pay $35M
Hopper agreed to the settlement following the FTC's allegations that it charged users for "tip" and "VIP support" fees that were selected by default and not clearly disclosed, so consumers paid without consenting. The FTC said Hopper also misrepresented the benefits travelers would receive from VIP support as well as for purchasing its "price freeze" option for hotel bookings. The $35 million will be allocated for consumer refunds.
“Hopper deceived consumers by showing them a total price that did not include hidden, pre-selected fees,” Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said in the press release.
According to Harteveldt, the settlement is beneficial for consumers looking to shop or book through other travel intermediaries.
“Hopper is viewed as part of a broader network of consumer B2C travel retailers, if you will, product and service sellers,” Harteveldt said.
“I think that the FTC is not looking at Hopper as a travel brand specifically so much as they're looking at it as a business, a service business, that does business with consumers and was burying optional products and forcing consumers to pay for these services when they the consumer may not have wanted it.”
In a statement shared with PhocusWire, Hopper said that it decided to settle instead of fighting the matter because the claims were “outdated” and “have no bearing on our business.”
“Pursuing years of litigation over outdated, ticky-tacky issues would distract us from our current customers and partners—and that is not a distraction we are willing to accept,” Hopper said in a statement. “There are no other ongoing investigations with the FTC or any other agency.”
The company said that after receiving and investigating files dating back to 2021 through present day, the FTC’s allegations were “narrow.”
Hopper said the claims were based on “primarily outdated display practices implemented during the pandemic, limited to the Hopper app and discontinued by Hopper in mid-2023, prior to the start of the FTC’s inquiry.”
Hopper added that its decision to settle does not indicate that the FTC’s claims had merit, but reflect its decision to move forward.
DOT loosens airline fee disclosure rules
While the FTC is tightening the reins, the DOT—which Harteveldt described as more “pro-business”—is rolling back restrictions on ancillary fee disclosures for airlines.
“Airlines have a better lobbying organization and a better voice with the administration than online travel companies,” Harteveldt said.
The July 2 rule rolls back the DOT's 2024 Final Rule Enhancing Transparency of Airline Ancillary Service Fees and reinstates a weaker disclosure standard the agency set in 2011. In February, the full Fifth Circuit Court of Appeals struck down the 2024 rule, finding the DOT hadn't given airlines a chance to comment on the data it relied on. The July 2 rule makes that change official.
Now airlines and online travel agencies no longer must show the actual fees for a first checked bag, second checked bag, carry-on or ticket change when a fare first appears in search. The first screen need only note that baggage fees may apply and where to find them, and the full fees can sit on a central page on the airline's site.
The rule also drops two obligations that reached online travel agencies directly. The 2024 rule required airlines to share critical fee data with the agents selling their flights so those agents could display it. It also required fees to be visible on the first page when a shopper arrived from a metasearch site such as Google Flights. Both requirements are now gone.
“What airlines wanted to do and were successful in doing was overturning Biden-era regulations about ancillary product and service disclosures and how those fees had to be presented to the consumer while shopping for flights,” Harteveldt said, noting that the fees are still required to be disclosed.
“The consumer still has to choose to add [a product], whether it's checking bags or an advance seat reservation or whatever it might be.”
The impact
The two legal documents demonstrate a level of inconsistency that will be reflected across a fragmented travel industry, according to Harteveldt.
“It’s as clear as mud,” he said. “We like to have neat, organized, tidy answers, and we want to be able, as an industry, to say here the regulations we have to comply with them.”
But in reality, travel sellers such as Hopper, Expedia Group, Booking Holdings and other online travel retailers are subject to multiple sets of guidance, he said.
“The sector is going to have to continue to march to the beats of different drummers,” Harteveldt said, noting that’s especially true for businesses like Hopper.
“They're going to have to abide by … whatever government regulations and disclosures apply to the suppliers as they are regulated, and to any guidelines and regulations that exist for how those online travel companies must disclose things to consumers as retailers.”